A blog dedicated to commentary, technical analysis, and the general machinations of the global gold and silver bullion markets with additional commentary on the global economy and related commodity markets.

Thursday, November 19, 2009

SILVER...ALL ABOARD?!

Silver's breakout Monday was confirmed Wednesday with a third successive close above 17.75. Silver prices are poised to explode upwards from here. Analysis of the Gold to Silver Ratio suggests a potential move of over $5 an ounce may have been ignited with Monday's breakout. Silver's daily chart, She's Breaking Up posted Monday, clearly shows Silver with plenty of room to run based on RSI and MACD. There will be dips in price along the way to the 20s. THEY SHOULD BE BOUGHT.

Probably the most compelling evidence to suggest Silver is poised for a MAJOR move higher is the Gold to Silver Ratio (GSR). Please see the chart posted above. Please note when looking at a chart of the GSR, a falling chart represents bullish action in Silver prices. The chart clearly makes a strong case for rising Silver prices over the next six weeks. The bearish MACD crossover has historically signaled powerful moves up in the price of Silver. With an average gain of 34% at these MACD turns over the past year, NOW is the time to be long Silver.

Near-term support in Silver for those seeking to buy the dip [should we get one] is 18.13 / 17.92 / 17.70. 16.45 remains key intermediate support for Silver. Based just on the GSR alone, Silver now projects to 22.79 by Christmas. A coinciding price in Gold would be $1322.

Let the show begin!

COMEX commercial shorts in retreat for silverBy Gene ArensbergAt now just under 9,000 tonnes (287,880,359 ounces) of silver metal held, some analysts believe that SLV controls up to a quarter of all the existing good-delivery bar silver available in London. What we find interesting about that is that all the silver held by SLV only amounts to a little less than $5 billion as of Friday’s close.

In today’s global-market world, $5 billion isn’t really all that much. As just one comparison, the U.S. government utilized 36 times that much ($180 billion) just to bail out one large U.S. insurance company (AIG) in 2008. Do we have to point out that we are talking about the holdings of just one silver fund?

It wouldn’t take very much of an increase in the amount of global investment demand to put material upward price pressure on the rest of the remaining silver inventory in the tiny silver market. With gold at $1,100-plus now, we believe it is merely a question of time before a new surge of investment demand for silver erupts worldwide.

Now that China has re-legalized precious metal bullion and is encouraging its citizens to accumulate physical metal, it is also just a question of time before people begin to realize the relative scarcity of actual physical silver metal compared to gold.

As we have pointed out in previous reports, today versus 1980 we have 51% more humans using 1,000% more dollars-yen-euro-yuan, etc. to chase 50% less real silver metal in a world where anyone can buy the metal with a mouse click in their study, in their underwear.

Gold Rally Could Reach $1,400: CEO[video]Investors are moving out of paper gold and into physical gold due to increased risk aversion, James Turk, chairman and founder of GoldMoney, told CNBC Wednesday. "In this current run I think you're going to see 1,200 to 1,400 (dollars per troy ounce) by the end of this year and next year I think it's going to continue," he said.http://www.cnbc.com/id/15840232?video=1334831876&play=1

Fed officials play down impact of weak dollarBy Kevin Plumberg and Neil ChatterjeeHONG KONG/SINGAPORE (Reuters) - Federal Reserve officials on Thursday downplayed the consequences of the falling U.S. dollar, underscoring that deflation is still a threat, especially with commercial real estate prices falling.

Dallas Fed President Richard Fisher said in an interview with Market News International that the weakening dollar, which hit a 15-month low against major currencies on Monday, is only one of the factors the Fed watches when setting policy.

"You pay attention to this," Fisher said in reply to a question about the effects of a weaker dollar.

"On the other hand, in terms of its inflationary input, unless it becomes disorderly, a depreciating dollar -- a gradually depreciating dollar -- doesn't necessarily add an enormous inflation impulse."

Fisher will become a voting member of the Fed's policy-setting committee in 2011.

The dollar has fallen 7 percent so far this year and likely has become a funding vehicle for bets on higher-yielding currencies in growing emerging markets.

Philadelphia Fed President Charles Plosser, answering journalists' questions after a speech in Singapore, was also not worried about dollar weakness.

"There's no particular reason you wouldn't expect the dollar to go back to where it was before the panic set in -- that is essentially all it has done at this point. I don't view that as anything particularly of concern," he said.